The DIFC Authority oversees all non-regulated businesses in the DIFC. They act as the liaison between the regulator, the Leasing facilities, and the Registrar of Companies. They also serve as facilitators, bringing in firms that wish to do business in the region.

The DIFC Courts handle all civil disputes. These are English Courts and work independently of UAE law for all civil matters. The DIFC Arbitration Centre deals with disputes that are to be settled under arbitration.

The Dubai Financial Services Authority (DFSA) regulates all authorized firms, Single Family Offices, DNFBPs, and Authorized Individuals. It is the independent regulator of financial services conducted in or from the DIFC.

The Dubai Financial Services Authority (DFSA) is the independent regulator that authorizes and supervises all financial service firms in the DIFC. It administers the various laws that form the legal framework and has powers to enforce these laws and the associated rules that apply to all regulated participants within the center.

In addition to regulating financial and ancillary services, the DFSA is responsible for supervising and enforcing anti-money laundering (AML) and counter-terrorist financing (CTF) requirements applicable in the DIFC.

Firms interested in carrying out financial services from the DIFC are required to submit applications to the Dubai Financial Services Authority (DFSA). The type of business that the applicant wishes to engage in defines the category of license that is required.

For example, a firm undertaking low-risk activities such as advising or arranging will require a DIFC Category 4 License, while a discretionary portfolio manager will require a DIFC Category 3C License. An STP broker, dealing on a matched principal basis, will require a DIFC Category 3A License, whereas a market maker or provider of credit will require a DIFC Category 2 License. Full-fledged banks that accept deposits will come under a DIFC Category 1 License.

A common misinterpretation is that a firm applies for a DIFC Category 3C or a DIFC Category 4 license. As described above, the activity defines the category, i.e., a company that wishes to engage in Asset Management, advisory, and arranging activities falls in the Category 3C, by virtue of the highest activity of Managing Assets, even though advisory activities fall in Category 4. This does not, however, automatically allow the firm to carry out all other activities that fall in Category 3C and Category 4. The firm would have to apply for specific activities and provide full details on each intended activity. Nareos provides comprehensive services to help businesses navigate the DIFC's regulatory environment and establish a strong presence in this dynamic market.

The category of the license will determine the amount of capital required.

Capital waivers may be available to the DIFC branch of a regulated financial institution having its head office in a recognized regulatory jurisdiction. There are three components of capital - base capital, risk-based capital, and expense-based capital. The higher of the three is set to be the capital requirement. These figures are calculated using the financial models that we make for the Regulatory Business Plan during the application process, and so are mostly unique to the company that applies for the license.

The figures given below are for base capital only, and actual capital may vary depending on the business model and the associated expenses and risks.

In general, for:

• Firms that hold Client Assets or Insurance Monies or act as the Administrator of an Employee Money Purchase Scheme, 18/52;
• Firms that carry out Insurance Intermediary activities and hold Insurance Monies but not Client Assets, 9/52;
• Firms in Category 2, 3A, 3B, or 3C (unless they hold Client Assets or Insurance Monies or act as the Administrator of an Employee Money Purchase Scheme), 13/52;
• Firms in Category 3D, 9/52;

Of the projected annual expenses of the firm. The Expense-based Capital minimum for a Category 4 firm (except in the case where client monies are held) is 6/52 of the projected annual expenses of the firm, unless in the case of Lower Prudential Risk Firms.

A Firm is a Lower Prudential Risk Firm if it meets all of the following conditions:

• It is in Category 4;
• Its License authorizes it to carry on only one or more of the following Financial Services:
  • Arranging Deals in Investments;
  • Advising on Financial Products;
  • Arranging Custody;
  • Insurance Intermediation;
  • Insurance Management;
  • Arranging Credit and Advising on Credit; or
  • Arranging or Advising on Money Services; and
• It does not hold Insurance Monies.

Lower Prudential Risk Firms are a subcategory of Category 4 firms. Such firms receive concessions from certain detailed prudential requirements, such as not being required to maintain capital to meet the Expenditure Based Capital Minimum requirement as described above. However, Lower Prudential Risk Firms are still required to meet other PIB requirements and other general prudential requirements such as maintaining adequate Capital Resources, and ensuring that it maintains capital and liquid assets which are adequate in relation to the nature, size, and complexity of its business to ensure that there is no significant risk that liabilities cannot be met as they fall due. These liabilities may be contingent and prospective liabilities, such as those arising from changes in business activities, or claims made against the Firm.

Calculation of capital is a detailed process and involves many factors. We recommend that you contact us for more details on the application process and capital calculations. Nareos provides comprehensive services to help businesses navigate the DIFC's regulatory environment and establish a strong presence in this dynamic market.

Yes, they can. Sheikh Mohammed bin Rashid Al Maktoum issued Law No. (5) of 2021 relating to the DIFC, which brought further clarity to the rules governing the promotion and supply of services and products for firms registered in the centre. The revised law confirms that DIFC-registered entities can supply services and products outside the DIFC, as long as they are primarily provided out of the firm’s premises in the DIFC area. Marketing and promotional activities are also allowed outside the centre. Nareos provides comprehensive services to help businesses navigate the DIFC's regulatory environment and establish a strong presence in this dynamic market.

Specific Advantages
Here are some specific advantages of establishing in the Dubai International Financial Centre (DIFC):

Legal and Regulatory Framework:

• The legal framework supports cross-border activities.
• 100% foreign ownership permitted.
• No restriction on foreign employees.
• No restrictions on capital repatriation.

Tax Benefits:

• Zero tax for 50 years on profits, capital, or assets from 2004.
• Zero tax on employee income.

Counterparty Confidence:

• Highly regarded, independent regulator.
• Independent, English-speaking, common law judicial system.
• Distinct from the UAE legal system.
• Risk-based regulatory approach.

Diverse Ecosystem:

• Central to regional deal-making.
• High concentration of international firms, investment funds, wealth management firms, banks, and financial institutions.
• World-class regional and international law and auditing firms, and other professional services.
• The largest fund domicile in the region.

Geographic Epicentre:

• Management offices, holding companies, and family offices are located closer to the assets they own or manage.
• The Middle East, Africa, and South Asia (MEASA) is increasingly the center of gravity for the global economy.
• Dubai plays a central role in the growing South-South trade, principally between Asia and Africa.
• Well-positioned to harness the potential of emerging markets.

Nareos provides comprehensive services to help businesses navigate the DIFC's regulatory environment and establish a strong presence in this dynamic market.